FRONT PAGE

CAMPUS NEWS:
   LOANS
   SOCCER
   TITLE IX
   BRIDGE
   CA FIRED
   EMS TRUCK
   FIRE
   IC SEMINAR
   PROFS
   SORORITY

A&E:
   AMERICAN CLOCK
   DVD PREVIEW

SPORTS:
    ROB'S BLOG
    THORPE
   

PAST ISSUES

New law will affect how students get school loans

by Tom Cooper
Exchange Staff

     President Bush signed a law dubbed the student loan reconciliation bill that might mean students will have to come up with more money themselves - up to four percent of their current Stafford loans from lender Sallie Mae - even as it cuts interest rates.

     The law, "HR2669," will do two major things. First, it will cut student interest rates. Secondly, it will increase Federal Pell Grants. However, Democrats have proposed to pay the costs of lower student interest by cutting basis points and special allowance rates for Stafford loans made by for-profit and non profit lenders. Basically, it will cut profitability for student loan companies.

     Right now, students receive 100 percent of federal Stafford loans dispersed. However, due to the new law the companies "need to re-evaluate" if they can continue to do that, according to Executive Director of Student Financial Services Kenneth Ferreira.

     "Students have received about 97 percent of their Stafford loans in the past. They are still responsible for the other 3 percent, but it was not covered by the loan," Ferreira said.

     There is also a 1 percent guarantee fee that pays the insurance  that the loan companies have been paying. They will also re-evaluate that to see if they can still afford to cover the fee.

     The investor group that had all but bought student loan lender Sallie Mae for 25 billion dollars is now fighting for the right to back out of the deal in court. JP Morgan Chase and Bank of America are now fighting over the 900 million dollar break-up fee that comes with backing out of the agreement.

     Students will have no problems getting the loans for them to go to school from Sallie Mae. The question is, will the last 4 percent, one being from the guarantee fee, and 3 percent being from the part of the loan that is not dispersed, come out of the students pockets again?

     For more information on student loans, go to www.salliemae.com, or contact Kenneth Ferreira.